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March 22, 2024Article written by George Micallef, Vice President of the Malta Hotels Restaurants Association.
In fact, the United Nation World Tourism Organization and World Travel & Tourism Council forecast that 2023 international tourist arrivals could reach 80 to 95% of pre-pandemic levels, whilst for Q1 and Q2 of this year, Eurostat reported the highest level of tourist bed nights over the past decade. These figures underscore a very strong resurgence of the tourism industry.
The outlook for the travel and tourism industry for the next few years also looks promising. The World Travel & Tourism Council forecasts a tourism GDP average growth of 5.8% a year over the next decade, compared to an overall predicted economic growth of 2.7% annually. Albeit this all depends on global economic developments and the effects of a prolonged war in the Middle East and the Russian invasion of Ukraine. Despite this optimism, the road ahead is an uphill one, and there are several hurdles that the industry needs to overcome.
The challenges primarily stem from climate change, staff shortages and global digitalisation, amongst other dynamics affecting industry, such as inflation and unrest in certain regions. We have reached a stage where we can no longer base the future on past performances or past business cycles, as we are up against new challenges and a high degree of the unknown. This calls for a transformation of the industry’s workings and a regeneration of the tourism product, as the traditional tourism model we have been accustomed to is increasingly becoming unsustainable.
Climate change poses huge challenges for the industry, and it obliges us all to look at tourism development differently. Tourism’s success can no longer be measured by visitor numbers as it is vulnerable to environmental and social changes and therefore, we must look beyond numbers and evaluate the impact of tourism in a more extensive manner.
This calls for a thorough review and update of policies at a national level. Europe traditionally boasts of attracting the highest numbers of international visitors, but we are now seeing a shift of this notion. Big players, such as France, amongst other countries, are opting for a reduction in visitor numbers and are revising policies that consider the wider context of the impact of tourism on the nation.
France went as far as to propose a minimum price for flights in Europe in a bid to reduce the aviation sector's carbon emissions. There was also talk about restricting international travel through the introduction of a personal carbon passport. Although it is unlikely that these proposals will gain the support of EU countries, they demonstrate the level of concern surrounding the future of the travel and tourism sector.
Malta and other EU member states are committed to environmental targets, and in this context, sustaining significant tourism growth can indeed be a major challenge for the country. Malta is now at an important juncture, where it needs to draw a line between existing and new development, to ensure that at the least, new investment and new development is of low impact but of high value, in keeping with sustainable principles.
Concurrently, we need to face the challenges of the transition process that sees the existing tourism supply infrastructure adapting and complying with new sustainability obligations. This means that hotels and other forms of tourism development must steer away from traditional models, as these may no longer be viable.
Staff shortage is another epic challenge for the travel and tourism industry and indeed for other economic sectors. Last year, the World Travel & Tourism Council reported that the industry continued to face widespread staff shortages, and that 11% of tourism jobs within the EU were likely to remain unfilled. This year, the situation worsened, and this was ascertained through a recent survey conducted by HOTREC amongst its EU members which underlined the extent of the prevalent problem of staff shortages across all EU countries.
Up to the recent past, we have looked at tourism as a generator of jobs, but nowadays we are seeing that there are very few out there who are prepared to take up these jobs on offer. This is a reality which needs to be addressed, as staff shortages are bound to constrain the industry’s growth. To cope with this problem at present, hotels and other industry service providers are looking at finding ways to limit or remove the provision of certain services that are traditionally provided in the sector. To combat the challenge of staff shortages, the EU Commission has also proposed the creation of an EU Talent Pool, by way of establishing an EU-wide platform to match job applications of third-country migrants to fulfil the needs of European employers.
Government has recently signalled its concern about the rising number of third country nationals (TCN’s) employment and indicated that the country needs to lower the dependency on TCN employment. This is worrying for the industry, as the number of expats it employs at present, must be retained at the same level at the least to service the demands of the industry employers, certainly in the short and medium term. The reality is that the chances of employing locals or EU nationals are becoming increasingly difficult.
Meanwhile operators in the sector are in no position to employ fewer employees, especially at a time when efforts are in place to improve the quality of the service on offer. The demand for expats is also bound to continue growing over the next few years with increases in hotel beds. If employment levels are somehow restricted, this will inevitably push hotels and restaurants, and other industry service providers to having to limit their operational capacity.
The digitalisation revolution is another challenge for industry which is also impacting customer behaviour. The industry needs to embrace radical changes and new ways of how it conducts its business. Artificial intelligence is picking up pace and we must adapt to new technological solutions whilst focusing on tailor-made services in anticipation of customers' preferences.
This is necessary not only to meet customer demands, but also to mitigate the problem of staff shortages and become more efficient when it comes to measuring sustainability levels. We need to aim at building a workforce that sees the merging of digital skills with interpersonal skills, as the hospitality sector fundamentals are based on human interaction.
What is certain is that industry players must prepare themselves well, and that policy makers bring all stakeholders together to ensure that resilient sustainable practices are well in place and vigilantly monitored, to ensure that travel and tourism is directed towards sustainability in the long term.
The COVID-19 pandemic was one of the most devastating crises of modern times, yet the travel and tourism industry managed to register a remarkable recovery, proving its resilience against all odds.
In fact, the United Nation World Tourism Organization and World Travel & Tourism Council forecast that 2023 international tourist arrivals could reach 80 to 95% of pre-pandemic levels, whilst for Q1 and Q2 of this year, Eurostat reported the highest level of tourist bed nights over the past decade. These figures underscore a very strong resurgence of the tourism industry.
The outlook for the travel and tourism industry for the next few years also looks promising. The World Travel & Tourism Council forecasts a tourism GDP average growth of 5.8% a year over the next decade, compared to an overall predicted economic growth of 2.7% annually. Albeit this all depends on global economic developments and the effects of a prolonged war in the Middle East and the Russian invasion of Ukraine. Despite this optimism, the road ahead is an uphill one, and there are several hurdles that the industry needs to overcome.
The challenges primarily stem from climate change, staff shortages and global digitalisation, amongst other dynamics affecting industry, such as inflation and unrest in certain regions. We have reached a stage where we can no longer base the future on past performances or past business cycles, as we are up against new challenges and a high degree of the unknown. This calls for a transformation of the industry’s workings and a regeneration of the tourism product, as the traditional tourism model we have been accustomed to is increasingly becoming unsustainable.
Climate change poses huge challenges for the industry, and it obliges us all to look at tourism development differently. Tourism’s success can no longer be measured by visitor numbers as it is vulnerable to environmental and social changes and therefore, we must look beyond numbers and evaluate the impact of tourism in a more extensive manner.
This calls for a thorough review and update of policies at a national level. Europe traditionally boasts of attracting the highest numbers of international visitors, but we are now seeing a shift of this notion. Big players, such as France, amongst other countries, are opting for a reduction in visitor numbers and are revising policies that consider the wider context of the impact of tourism on the nation.
France went as far as to propose a minimum price for flights in Europe in a bid to reduce the aviation sector's carbon emissions. There was also talk about restricting international travel through the introduction of a personal carbon passport. Although it is unlikely that these proposals will gain the support of EU countries, they demonstrate the level of concern surrounding the future of the travel and tourism sector.
Malta and other EU member states are committed to environmental targets, and in this context, sustaining significant tourism growth can indeed be a major challenge for the country. Malta is now at an important juncture, where it needs to draw a line between existing and new development, to ensure that at the least, new investment and new development is of low impact but of high value, in keeping with sustainable principles.
Concurrently, we need to face the challenges of the transition process that sees the existing tourism supply infrastructure adapting and complying with new sustainability obligations. This means that hotels and other forms of tourism development must steer away from traditional models, as these may no longer be viable.
Staff shortage is another epic challenge for the travel and tourism industry and indeed for other economic sectors. Last year, the World Travel & Tourism Council reported that the industry continued to face widespread staff shortages, and that 11% of tourism jobs within the EU were likely to remain unfilled. This year, the situation worsened, and this was ascertained through a recent survey conducted by HOTREC amongst its EU members which underlined the extent of the prevalent problem of staff shortages across all EU countries.
Up to the recent past, we have looked at tourism as a generator of jobs, but nowadays we are seeing that there are very few out there who are prepared to take up these jobs on offer. This is a reality which needs to be addressed, as staff shortages are bound to constrain the industry’s growth. To cope with this problem at present, hotels and other industry service providers are looking at finding ways to limit or remove the provision of certain services that are traditionally provided in the sector. To combat the challenge of staff shortages, the EU Commission has also proposed the creation of an EU Talent Pool, by way of establishing an EU-wide platform to match job applications of third-country migrants to fulfil the needs of European employers.
Government has recently signalled its concern about the rising number of third country nationals (TCN’s) employment and indicated that the country needs to lower the dependency on TCN employment. This is worrying for the industry, as the number of expats it employs at present, must be retained at the same level at the least to service the demands of the industry employers, certainly in the short and medium term. The reality is that the chances of employing locals or EU nationals are becoming increasingly difficult.
Meanwhile operators in the sector are in no position to employ fewer employees, especially at a time when efforts are in place to improve the quality of the service on offer. The demand for expats is also bound to continue growing over the next few years with increases in hotel beds. If employment levels are somehow restricted, this will inevitably push hotels and restaurants, and other industry service providers to having to limit their operational capacity.
The digitalisation revolution is another challenge for industry which is also impacting customer behaviour. The industry needs to embrace radical changes and new ways of how it conducts its business. Artificial intelligence is picking up pace and we must adapt to new technological solutions whilst focusing on tailor-made services in anticipation of customers' preferences.
This is necessary not only to meet customer demands, but also to mitigate the problem of staff shortages and become more efficient when it comes to measuring sustainability levels. We need to aim at building a workforce that sees the merging of digital skills with interpersonal skills, as the hospitality sector fundamentals are based on human interaction.
What is certain is that industry players must prepare themselves well, and that policy makers bring all stakeholders together to ensure that resilient sustainable practices are well in place and vigilantly monitored, to ensure that travel and tourism is directed towards sustainability in the long term.
George Micallef has been involved in the tourism industry his entire life. He is a hotelier and practiced as a freelance tourism development consultant since 1987. He has conducted several studies on the development of the tourism industry and led a number of projects in the Public and Private sectors both in Malta and overseas.
As the major Association in the tourism sector, the MHRA represents the interests of its members on several important national policy making bodies, including the board of the Malta Tourism Authority and all its directorates, the Institute of Tourism Studies and the Malta Council for Economic and Social Development.
For more information visit https://mhra.org.mt
Click here to see Horeca Issue 14 online
